Thailand's Constitutional Court has begun hearings in a case that threatens to plunge the country into a deeper political crisis and another round of violence in the coming months, analysts say.

The court last month ordered Parliament to halt the consideration of a Bill to set up an elected assembly to amend the Constitution, drawn up by a committee handpicked by the military in 2007.

Yesterday, it began a two-day hearing into a petition that alleged that the Bill would result in an amended Constitution that would remove the monarch as head of state.

The order, which pitted the judiciary against the legislature - raising the fundamental question of who runs Thailand - enraged many in the ruling Puea Thai party and the 'red-shirt' movement that helped vote it into power just over a year ago.

Puea Thai says it has no intention of removing the monarchy from the apex of power. But amending the Constitution to return power from the establishment elites - appointed judges and bureaucrats - back to politicians was one of its election promises.

The opposition Democrat Party - traditionally supportive of the royalist military-bureaucratic elites - supported the court, saying a popular vote did not mean political parties were above the courts.

The Democrats and an assortment of royalist groups also see the proposal as part of a strategy to enable former premier Thaksin Shinawatra, kicked out by the military in 2006, to return four years after fleeing the country to dodge a two-year jail sentence on an abuse of power conviction.

Analysts say that whatever the court's verdict - which could come as early as tonight or as late as well into next week - there could be severe ructions in Thailand's fragile detente between Thaksin's sister, Prime Minister Yingluck Shinawatra, and the elites.

A backtrack by the court, allowing the proposal to go ahead, could see royalist Democrat supporters take to the streets against the ruling party. In such a scenario, many analysts see clashes in the streets as almost inevitable.

Stopping the Bill could lead to disqualification of the Cabinet and even dissolution of the ruling party. While Puea Thai is prepared for such an eventuality, this would inflame the more extreme factions of the red shirts, again raising the spectre of street violence. Much depends on the wording of the final verdict, a party insider said, asking not to be identified.

"We won't rush this," he said. "If the argument is procedural, we will just follow the procedure step by step and amend the Constitution.

"The Prime Minister sees it as the first step in a long process. But the debate has to start somewhere. There is room for compromise. We want it all thrashed out in Parliament, not in the streets."

Some feel that is too optimistic. Said political science lecturer Mano Laohavanich of Thammasat University: "When you talk to people on both sides, the rhetoric is very strong. One group feels they have still to receive justice, while the other will not change."